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2021 Inflation Adjustments & Tax Tables

The IRS has issued the 2021 annual inflation adjustments for may tax provisions, along with the 2021 tax rate tables for individuals, trusts and estates (Rev. Proc. 2020-45).

inflation adjustments

Here are the inflation adjustments to be used to prepare tax year 2021 returns:

• 2021 standard deduction will increase to:

  • $25,100 for married individuals filing jointly or surviving spouses
  • $18,800 for heads of household
  • $12,550 for unmarried individuals or married filing separate

• Maximum amount of the earned income tax credit (for taxpayers with 3 or more children) will increase from $6,660 for 2020 to $6,728 for 2021

• Maximum amount of the adoption credit will increase to $14,440

• Exemption amounts for the alternative minimum tax:

  • $114,600 for married individuals filing jointly or surviving spouses
  • $73,600 for unmarried individuals
  • $57,300 for married individuals filing separately
  • $25,700 for estates and trusts

• For tax years beginning in 2021, the Sec. 179 amount will be $1,050,000 with a phaseout threshold of $2,620,000

• The qualified business income threshold under Sec. 199A( e)(2) will increase to:

  • $329,800 for married individuals filing jointly
  • $164,925 for married individuals filing separate returns
  • $164,900 for single individuals and heads of household

• The Sec. 911 foreign earned income exclusion amount will increase to $108,700

• The basic exclusion amount for determining the unified credit against the estate tax will be $11,700,000 for decedents dying in calendar year 2021

• The annual gift tax exclusion amount will remain at $15,000

Contact us for tax planning assistance

The 2021 inflation adjustments for these tax provisions provide some important considerations for your 2020 tax planning strategy. If you need assistance with your individual or business tax planning, we can help. Please email us at info@hoffmancpas.com or call 443-320-4101.

This entry was posted on Monday, November 2nd, 2020 at 10:24 am. Both comments and pings are currently closed.